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IRS Kills Tax Exemption Of Foundation Pushing Eternal Life

Benjamin Franklin famously wrote that nothing is certain except death and taxes. These days, it seems, maybe not even those. In a previously unreported action, on May 10th, the Internal Revenue Service revoked the long-held charitable tax exemption of the Life Extension Foundation Inc., an organization dedicated to denying the certainty of death. The Foundation is contesting the revocation in a lawsuit filed on August 7, 2013 in the Federal District Court for the District of Columbia. (The revocation is available in redacted form here as PLR 201331008. )

About The Life Extension Foundation

The Life Extension Foundation is a substantial organization. According to its 2009 Form 990 (the latest available on Guidestar), it had assets of over $25 million and netted more than $3 million on revenue of more than $18 million that year. From those funds it supported some enterprises that would warm the coldest heart of a Larry Niven or Robert Heinlein fan:

The Stasis Foundation received $5 million to continue its development of a state-of-the-art facility where DNA will be stored by those who choose cryopreservation.

21st Century Medicine, a for-profit company, received $3.5 million. The company is an emerging leader in living systems preservation technology.

Suspended Animation received $1.1 million. SA stabilizes the human body cells immediately after death and transports the deceased to a cryogenic storage site. (Before you sign up you might want to read Larry Niven’s A World Out of Timeto reflect on the possibility of a dystopian future State which is unkind to corpsicles )

The IRS Problem With Life Extension Foundation

The IRS’ problem with the Foundation is, however, an entirely worldly one: it asserts the membership organization’s operations seem to be too entwined with the for-profit Life Extension Buyers Club. Members of the Foundation receive discounts on health supplements and the Buyers Club pays royalties to the Foundation. The origin of this arrangement goes back to the 1990s when the Florida Cryonics Association (the original name of the Foundation) moved some commercial operations to a for-profit company.

All in all, in the view of the IRS, the Foundation is still too entangled in profit making activities. In the revocation, it writes:

…. the Foundation operates to a more than insubstantial extent for the non-exempt purpose of aiding in the sale of nutritional supplements, publications, and blood testing services by a for-profit entity.

The IRS also raised concerns about the independence of the foundation’s grant-making. The Foundation had no written grant application form and no published criteria for grant selection, the IRS complained. Moreover, Saul Kent, the founder of the Foundation and major shareholder of the Buyer’s Club, serves on the boards of companies that have received annual grants from the Foundation. As this old Los Angeles Times article reports, Kent is a longtime advocate of cryonics who received national attention in the late 1980s when he had his late mother’s head surgically removed for freezing.

It almost seems now like the organization is being punished for being too successful—in raising money and selling memberships, that is, not (so far as we know) in extending life. Still, the IRS has raised some legitimate concerns. It will be interesting to see how this case plays out. I hope I live long enough to see the resolution.

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The LEF is not registered as a church, but a different class of charity that is subjected to a more restrictive set of regulations. There’s at least one other cryonics-related nonprofit called the Society for Venturism, whic is registered as a church. Of course, it does not promote the existence of God (which is not required for a church), but it does collect donations on behalf of dying individuals who cannot afford cryonics (such as Kim Suozzi and Aaron Winborn).

Hopefully the LEF will be able to successfully appeal this and it will lead to a more open and competitive grant-making process which will result in more research in cryonics-relevant areas, and the elimination of any conflicts of interest.

Some mainstream neuroscientists think cryonics deserves a second look as a means to turn death from a permanent off-state into a temporary and reversible off-state. We can start to make progress towards that goal in the here and now, using current science and technology, and without invoking anything science-fictional like a “technological singularity.” Look up the website of the Brain Preservation Foundation. Michael Shermer, the critic of pseudoscience and editor of Skeptic magazine, serves as one of the foundation’s advisers, so he apparently considers its goals scientifically defensible.

The retroactive revocation appears to be valid given the fact that the organization operates mostly for profit purposes inconsistent with its approved exempt purpose.

Does the IRS have the guts to retroactively revoke 501(c)(4) tax exempt status to the Tea Party organizations that primarily have operated for political purposes? The IRS should retroactively revoke – but the new political Commissioner will not do anything that will have political consequences.

My general impression is that 501(c)(4) status does not tend to have really high tax stakes attached to it. The 501(c)(4) groups seem to spend all the money they take in, pretty much anyway, and contributions are not tax deductible. The whole point, as I understand it, is to avoid campaign contribution reporting requirements and now to bolster a pretty phony scandal narrative. The other thing is that it would be relatively easy for a lot of these groups to fold their tents and start new under a slightly changed name.

It seems to me that the main purpose of the LEF is mainly to fund cryonics-relevant research and development, which is certainly compatible with their mission. The Life Extension Buyer’s Club is an incidental (although highly successful) fundraising strategy. From that perspective, it seems the retroactive revocation may be invalid. Why should a legitimate charity be penalized for being successful at raising money? All else equal, more money being raised for charity is a good thing — it’s the very point of tax-deductible donations, for example.

Regarding the other point you raised, I agree that there should be no favoritism for political groups such as the Tea Party. However, there are legitimately grey areas. Certain issues that are not directly about a political party, such as use of embryo-derived stem cells and the agressive funding of antiaging research with tax dollars, may be divided along party lines, just as e.g. religious conservatism is. Many churches advocate religious conservatism agressively, which results in voting behavior in line with a given party — we do not take away their tax exemption simply for that. Similarly, advocating something like increased government spending on life extension (as some longevity advocacy groups do) is somewhat distinct from advocating the political party or candidates perceived as most likely to do so.